This is a discussion on Mitsubishi: A prime takeover target for Tata or Mahindra? EDIT: Nope it's Nissan! within The Indian Car Scene, part of the BHP India category; Originally Posted by LordSharan
... So the debt Tata's took for taking over Corus, is essentially on books of Corus, ...

... So the debt Tata's took for taking over Corus, is essentially on books of Corus, guaranteed by the assets and collateral from Corus, which is held by a different firm. Now, Tata just has to sell of Corus to get rid of the debt. and this process has already initiated.

If you read the Corus sell off, you will see that while they have sold the UK assets for a nominal 1 GBP amount, the debts continues to sit with Tata. They have not been able to sell off the debt too and they now need to figure out how to manage that bit. The idea is that at least they are no longer bleeding cash flow. When they bought Corus, coal used to form 30% of cost and 70% was manufacturing. Now it is the other way around with the rising commodity costs and with no cheap coal available to Tata Steel for the UK plants, life with Corus was going a long cash flow bleed.

Cyrus is not looking at Tata Steel and Tata Motors in silo. While they are distinct legal entities, he is carrying a conglomerate view through Tata Sons. I believe his decisions will carry a degree of cohesion when it comes to managing debt.

In Tirunelveli, Mitsubishi opened up new dealership on M&M's First Choice Premises. And official Service center for all Mitsubishi vehicles is M&M's First choice. I got my car serviced, Suspension work done with Genuine Spare parts received within 2 weeks. Mitsubishi is giving training to M&M's technicians of First Choice in their Chennai plant.
Does this give any indication of what is cooking.?

If the mileage scam results in any penalty, will mitsubishi be able to survive it ? Need to watch and see how they will handle it and what happens before anyone should think about it.

I am not sure if either Tata or M&M could use their facilities globally to push their cars. The standards of cars made by Indian manufacturers still are inferior and any attempt to do that can only bring down Mitsubishi brand too.

Mitsubishi has had no plans of developing cars on traditional platforms - read as running on fossil fuel. They have already stopped developing the Pajero/Montero. So there will be no new models of these. Their industry best Evo was discontinued some time last year.

They are going all guns blazing into the EV segment and they see the future there. They are coming out of the Fossil Fuel era, also as a social responsibility.

I do not see any value in it for either Tata or Mahindra.

Maybe VW, who was till now, far far behind in developing the EV. But with the diesel gate scandal, they have started taking keen interest in developing one. But then, VW has a lot of Muscle of its own to go and develop one. In fact, a close friend works in one and did mention VW going all out in developing the EV. As per him, the company expects that EV's will form 75-80% markets share by 2030 (but thats OT)

Moreover. Mitsubishi is not just a car company. Cars bring in only a small portion of their revenue. So even if there are heavy losses in its Passenger Car business, it is nothing that cannot be absorbed by the group as a whole.

They have turned JLR around, i can't figure out what are you referring to here?
While we may throw bricks at Tata, the fact remains that they managed to do something which the brits,BMW and ford couldn't have dreamt of, made JLR profitable and back in game. I am confident that Jag just might overtake one of the German trio in the future judging by the direction they're heading.

Well, I would like to keep my fingers crossed when you say TATA's 'have turned around JLR'. Yes, they may have had a few profitable quarters. But they are not out of the woods yet. Sales is dwindling in China, which is a major market for JLR. European economy is looking really scary with the possibility of Brexit looming. American car market has tough competition. So TATA-JLR have a tough road ahead. If they can weather this storm then I will say its a real turn around. TATAs are owning JLR for last 8 years which is very little time to judge whether the acquisition is a hit or a miss. Take the case of their other acquisition, CORUS, which has turned out to be a miss. JLR too was a big fish; many times larger than their size. Have they swallowed it fully? I will wait for a few more years to say anything for sure. Having said that, I wish TATA good luck with the JLR (I too have some pennies invested with them...!)

Well, I would like to keep my fingers crossed when you say TATA's 'have turned around JLR'. Yes, they may have had a few profitable quarters. But they are not out of the woods yet. Sales is dwindling in China, which is a major market for JLR. European economy is looking really scary with the possibility of Brexit looming. American car market has tough competition. So TATA-JLR have a tough road ahead. If they can weather this storm then I will say its a real turn around. TATAs are owning JLR for last 8 years which is very little time to judge whether the acquisition is a hit or a miss. Take the case of their other acquisition, CORUS, which has turned out to be a miss. JLR too was a big fish; many times larger than their size. Have they swallowed it fully? I will wait for a few more years to say anything for sure. Having said that, I wish TATA good luck with the JLR (I too have some pennies invested with them...!)

Tata have turned around JLR and any Auto analyst in the world will tell you so. Here's the crash course:

Under Ford JLR's annual volumes were well under 300k cars, Last year under Tata they have sold 522,000 cars. While most manufacturers struggled with the Chinese slowdown JLR's sales rose 13%. Let's not forget a major reason for the Chinese slump and fall in profits was the Tianjin Port fire where the company had to write off 6000 cars. In 2015 JLR also invested and completed their new Chinese plant and the new engine facility at Wolverhampton (which they are about to double in size.

Despite the slowdown in March JLR recorded a massive 43% sales growth in China YoY. So sorry to spoil the parade despite the said roadblocks JLR us doing very very well. Lets not forget these figures are prior to the full scale international sales of the XE and XF. This year they launch the Evoque Convertible, F-Pace (both of which have strong pre orders) and the all new Discovery. Their volumes will continue to grow.

With the XUV500, Mahindra has already proven that it knows how to build a good premium SUV.

Mahindra is in the business of making & selling its own cars, not merely selling someone else's cars (Rexton doesn't apply as they own SsangYong). Also, why would they sell an SUV that potential customers of the XUV500 might be tempted to upgrade to in the same showroom?

I think these two points are very relevant in this discussion.

Is XUV a premium SUV, that too in the global context ?

In the US where M&M has zero presence, Mitsubishi's cheapest offering was an outlander with much better specifications than the XUV.

Even if Mahindra upgrade the specs of the XUV the brand will be virtually unknown.

Mahindra is a firm not known for it's innovation. First they rebadged Wiley's, then the created scorpio exclusively by outsourcing and roping in suppliers.

In house engineering is not their strong point

Their first sedan needed a tie up with Renault(just rebadging), could not create a new product from scratch, this testifies my above statement.

I think acquiring the Mitsubishi brand will be a dream come true for M&M and can give them access to cutting edge in house engineering.

Gone through all the posts. Interesting discussion. Instead of a merger, won't getting the rights to brand vehicles as Mitsubishi and sharing a percentage as fee be better ? Acquiring Mitsubishi is a challenge. Imagine M&M selling a Mitsubishi branded XUV with gizmos and better specs in the US.

As mentioned before, Tata or Mahindra have no chance of selling vehicles under their name simply due to no brand presence in the US. Mitsubishi can help. And in return Mitsibishi can get vital revenue it needs. Perhaps after some time, both can collaborate on a non conventially powered car as the future is oil-less.

Mitsubishi will also get access to ready made network in India to sell the Evo (possibly ? ) and the Montero or other vehicles.

Slightly OT- I used to remember the
Phasor Diagram showing the relation of phase and line currents during my electrical networks class as the Mitsuboshi logo wala diagram! Even most of the non auto enthusiasts (engineers) in my college will know exactly what that is even if they don't know Mitsubishi as the maker of the legendary Evo!

Deal would see Nissan become the controlling shareholder in Mitsubishi Motors

Quote:

The companies also plan to jointly develop new cars together. Mitsubishi hopes to tap into Nissan’s global network of factories to grow in more markets, such as the lucrative U.S., where Mitsubishi has only a small presence. Nissan wants a bigger share of Southeast Asia, where Mitsubishi has had more success.

Quote:

The deal also catapults the Renault-Nissan alliance into a rarefied stratosphere of the world’s biggest car makers. Renault-Nissan and Mitsubishi sold a combined 9.6 million vehicles world-wide in 2015, data from each of the companies showed. That is close to the roughly 10 million vehicles that Toyota Motor Corp., Volkswagen AG and General Motors Co., the world’s three biggest auto makers, each sell in a year.

Quote:

Nissan isn’t leaping into the ¥237.4 billion deal blindly. Its investigators are leafing through Mitsubishi’s books, and the deal is contingent upon them not finding anything surprising, Mr. Ghosn said. The companies hope to have the deal done by May 25.

Carlos Ghosn has done it again - Mitsubishi is all set to become a member of the Renault-Nissan Alliance!

The negotiated 34% stake in Mitsubishi will make Nissan the largest shareholder of the struggling Japanese manufacturer. Other Mitsubishi group companies will continue to hold significant stake in Mitsubishi Motors Corporation.

Nissan and Mitsubishi already have a good history of co-operation and badge-engineering:

Mitsubishi, which is in a very difficult situation, will benefit immensely by becoming a part of the Renault-Nissan Alliance. The Mitsubishi brandname will continue its journey in the automotive world and will only become stronger in the future. Their rapidly shrinking product portfolio can be enlarged by badge-engineering Alliance products in the short term, and by platform-sharing & joint development of products in the long run.

As for Nissan (& Renault), it adds another well-established brand to their Alliance. Renault, Nissan, Mitsubishi, Infiniti, Datsun, Renault-Samsung, Dacia, Venucia, Lada - it really is one big family! And they have a well-established friendship with Mercedes-Benz & Smart as well.

This is a win-win situation for both Mitsubishi & Renault-Nissan, and frankly the only way a small, shrinking and struggling Mitsubishi could survive in the big, bad world of automobile companies.